How We are Growing Our Net Worth – May 2018

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Tracking our net worth helps my wife and I stay on track with our personal finances. Our path to financial independence (FI) is tied to things like our net worth and the amount of passive income we are able to generate every year.

The good news is that most months … our net worth grows. And every time it grows, it means we usually have grown our assets and lowered our liabilities.

Anytime liabilities decrease, that means more of our income can be used to buy assets.

And the more assets we accumulate, the sooner we can reach FI.

Our first net worth report was published 3 years and 3 months ago. It is an awesome feeling to look back and see what our net worth was back then compared to what it is today. Hopefully in another 3+ years … we can look back and see similar results.

Here is our latest monthly net worth update.

How Did We Grow Our Net Worth to Over $627,000 in May 2018?

How We Track Our Net Worth

Before we move on to reviewing our April net worth numbers, I would like to mention how we are using our Personal Capital account to do most of the work.

We are tracking our net worth through this free account. This tool has made it possible for us to easily track our net worth at a moments notice.

Personal Capital

I highly recommend checking out Personal Capital and setting up a free account. It is the best tool available to help track your net worth and can even help with your spending.

So how did we do this May?

May 2018 Net Worth

As of May 31st, 2018 – our net worth is $622,548. That is a sizable increase decrease of over $14,000 in net worth compared to last month (April). This is the highest our net worth has ever reached and we hope to continue this trend through 2018.

We managed to pay down some debt last month … which was a good thing. But our assets increased by a bunch … which is the reason for the big jump.

Our net worth in May 2018 increased significantly by 2.4% compared to April.

April 2018 Net Worth = $607,716
May 2018 Net Worth = $622,548

Net Worth Change = +$14,832

A high level breakdown of our assets and liabilities are detailed below.

Assets

We always report our net worth with 3 main asset categories that include – investments, cash, and home value.

Note – We currently do not count our automobiles as an asset and they are only found in the liability section of our reports.

Below you will find a breakdown of each category for last months checkup.

Investments

Our investment category includes a dividend income portfolio, 529 plans for the kids, 457 account, emergency fund accounts, IRA accounts, Roth accounts, and any other retirement account we have opened, etc. We have been building these accounts for the past 10 to 15 years.

These equity investments are currently (and likely will always be) our highest valued asset. There isn’t a day that passes that we are not working to make this asset grow … despite what the overall market is doing.

During May our investments saw an awesome increase compared to last month. Overall … our investment assets rose by $9,821 in May compared to April.

April 2018 Investments = $458,220
May 2018 Investments = $468,041

Investment Change = +$9,821

That is an awesome 2.1% gain in value of our investments from last month. We haven’t seen these types of gains since late last year.

Cash

Our current cash includes all of our checking and savings accounts. We don’t usually carry a high cash balance and like to move it into the stock market to purchase income producing assets. However, it is also important to have some cash on hand in order to cover unexpected expenses.

April 2018 – Cash = $3,351
May 2018 – Cash = $5,660

Cash Change = +$2,309

The cash balance grew by a couple thousand dollars this month compared to April. This is just a snapshot in time and I expect a lot of that extra cash to be used to pay off debt (see liabilities below) and continue to invest.

Note – When it comes to cash … I find it a very inefficient way to build wealth. That is why we put it to good use whenever we can.

Home Value

Reporting home value in our net worth reports is good and bad. For example, we use Zillow to estimate on our home value. This is simply an estimate at best and may not represent the actual value we could sell our home for. That is the bad part of reporting it on our net worth.

On the other hand, it is such a huge asset that not reporting it would skew our net worth results. We currently owe about 50% (maybe a little more) of the value of the home. That is a significant part of our overall net worth in my opinion.

The estimated value of our home increased slightly this past month compared to April.

April 2018 – Home Value (est) = $344,524
May 2018 – Home Value (est) = $346,629

Home Value Change = +2,105

Again … these are just estimates of our home value.

Total Assets

Our biggest asset class (stocks) rose by almost $10,000 last month! In addition, our estimated home value rose by over $2,000 and our cash balance rose by an additional $2,000+.

Overall our total assets rose by a modest 1.8% since last reporting. This represents one of the largest increases to our asset value in many months.

April 2018 – Total Assets = $806,095
May 2018 – Total Assets = $820,330

Total Asset Change = +$14,235

Recent stock market gains and a solid economy have helped push our asset value and net worth up significantly the past month.

Liabilities

There are 3 main liability categories that we will report on. The first and largest is our mortgage balance. Then we have our credit card balances … which is how we pay for almost every purchase we make.

The last category is our car loan(s). We are working to pay extra on one of our vehicles and hope to have it paid off by early 2019.

Mortgage Balance

One month at a time … we are working to pay down our mortgage debt. Fortunately, we have a reasonable mortgage rate and a monthly payment that doesn’t completely hold us down.

We have a 30 year mortgage on our home with a rate of 4.375%. That isn’t too bad of a rate, so we don’t normally pay any extra on the mortgage.

Even though we have a manageable mortgage payment … we are still suffering for one mistake we made when we bought a home. My wife and I made a mistake and bought a home that was too big. We could have easily raised our 3 kids in a house that was 1,000 less square foot than what we have now.

Over the past several months, we have been considering downsizing our home to something smaller and less expensive. We are continuing to look for smaller homes in our area … but it seems that the housing market is booming so homes don’t stay on the market for very long.

For now … we will continue to just pay our mortgage every month and watch the principal shrink little by little.

April 2018 – Mortgage Balance = ($177,031)
May 2018 – Mortgage Balance = ($176,598)

Mortgage Balance Change = +$433

Each month we make a mortgage payment, our principal drops by a little bit more each month.

Car Loan(s)

At the start of last year (January 2017), we took on a lot more debt after buying a second car … which I will refer to as “car loan #2”. My 16+ year old vehicle finally died, so I needed reliable transportation.

The good news is that we were able to purchase a new vehicle that gets over 35 mpg with a 0% financed loan. The bad news is that we took on $17,000+ in debt and a second car payment. I fully expect to drive this car for 15 years or eventually sell it to my son when he starts to drive.

Note – My oldest son starts drivers training next week! It won’t be long before he starts to drive. This means we need to have a plan in place for how to handle another vehicle … if that is what we decide for him.

As far as our other “family car”, we have a very low rate and are on year #6 of the loan. We refer to this as “car loan #1”.

Since our rate on this vehicle is 1.56%, we haven’t paid too much extra on it. While we are anxious to pay this loan off, we think we could make a higher return from investing the money.

We made several pre-payments on this loan late last year, so we don’t need to make an additional payment now until this summer. For now, we are using this extra money to invest since the overall market is down. We want to buy equity assets on sale in the market right now instead of paying off a 1.5% interest loan.

Since we didn’t make any payments in May, the balance of car loan #1 remained the same from last month. We will need to start making payments again in June.

April 2018 – Car Loan #1 = ($4,771)
May 2018 – Car Loan #1 = ($4,771)

We did manage to make our car loan #2 payment and saw the balance drop.

April 2018 – Car Loan #2 = ($14,020)
May 2018 – Car Loan #2 = ($13,774)

Car Loan(s) Change = +$246

In total, our car loans pushed our net worth higher by almost $250.

Credit Card Balance

Normally, our credit card spending is the biggest area for improvement when it comes to debt.

We never (ever) let our credit card payments slip past their due date. Paying interest or late fee’s is a complete waste of assets.

April 2018 – Credit Card Balance(s) = ($2,557)
May 2018 – Credit Card Balance(s) = ($2,639)

Credit Card Balance Change = ($82)

Our credit card balances fluctuate a lot month to month. During this past month’s snapshot, we had $82 more in short-term credit card debt … which is no big deal really.

Note – The balances shown above are at a point in time and don’t reflect the amount we spend in a month.

One of the things I absolutely lover about credit cards are the travel rewards we are starting to bank. Check out our Travel Rewards page for up-to-date information on our pursuit for FREE Travel.

Now into month 10 of our credit card journey, we just finished up on started working on card #9 … and have banked over $10,000 in future free travel!

Total Liabilities

Since last reporting, our mortgage balance dropped a little – as expected. We also saw a nice dip in car loan debt – which was also expected.

Our credit card balances saw a tiny bump in short-term debt.

Collectively our total liabilities decreased by $597. That certainly isn’t a ton … but it is still a move in the right direction and will go towards growing our overall net worth.

Remember … growing your net worth is not just about increasing your assets. It is just as important to lower your liabilities at the same time.

The larger the gap is between your total assets and total liabilities is the key to financial independence and something my family is working towards.

April 2018 – Total Liabilities = ($198,379)
May 2018 – Total Liabilities = ($197,782)

Total Liabilities Change = +$597

Note – My wife and I recently (last month) saw our liabilities drop below $200K … which has motivated us to keep knocking down our debt. We look forward to paying off our auto loan #1 within the next 12 months and then hope to tackle our other debts.

Net Worth Summary

As promised … we plan to keep these net worth posts updated every month now. Not only does it keep us accountable in how we save, earn, and invest … it is great motivation when you see growth like we have over the past 3 years.

For example, our first ever net worth report was posted back in March 2015 … 3+ years ago. We reported a net worth of $434,984 back then. In 39 months time, we have managed to grow our net worth by over $187,000.

We should be able to conservatively cross the 7-figure net worth well within the next decade … hopefully much sooner. Even with market uncertainty, we will continue to pump in new money each month into the market while we work to pay down our debt. Focusing on both sides of the net worth equation should help us push past $1,000,000 and then on closer to our actually FI Number … which is somewhere between $1.0 million to $1.5 million.

I really enjoy looking back at our old numbers (like our March 2015 net worth totals) as it helps keep us motivated and show us tangible results of our work.

Do you track your net worth? How did your May net worth totals turn out? What steps are you taking to widen the gap between your assets and liabilities?

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